Good morning. Markets were buoyant on Wednesday, leading up to the New Year end. European and Asian equities led the pack with the CAC in France and IBEX in Spain standout performers. Base metal prices rose considerably with Gold touching 1412 an ounce and silver recording an 82% rise for the year to date. Inflationary worries due to increased money supply from the Fed and ECB have been highlighted as the key contributing factors. On the economic front, US Business expansionary data is expected to be announced on Thursday with mixed forecasts for the period. Existing home sales will also be released. In China, government officials announced that taxes would rise on automotive vehicle purchases to stem the level of demand and growth. Raising the rate for small cars to 10%, the move is expected to couple the recent interest rate rise in slowing the economy.
On the equity market front, the S&P500 was 0.3% firmer intraday with traders eyeing a strong finish for the end of year. Fast food company McDonalds rose 1% with analysts highlighting a 24% return for the year to date due to better than expected market conditions. This sector benefits from weaker macro economics. Rumours of a takeover for BJ Wholesale sent the company 6.5% higher intraday.
On the currency front, the greenback weakened against the yen on Wednesday with speculation of possible intervention having little impact on the price. Yesterday’s comments only added fuel to the fire, with traders continuing to move towards safety assets leading up to the end of the year. In September of this year, the Japanese government intervened in the currency markets with 24.7 billion purchase of US dollars. This temporarily had an impact on the pair, before economic concerns pushed the yen higher. Mixed global economic news coupled with debt concerns in Europe have been highlighted as key contributors to the rise. The USDJPY traded at 81.98 in the afternoon session.